U.S. Exports to Russia Plummet 34% Amid Escalating Sanctions Battle

The escalating U.S. sanctions battle against Russia appears to be taking a toll on trade with the country, with June data showing both sides of the ledger falling as Washington ratcheted up the financial pressure on Moscow.

U.S. Commerce Departmentdata released Wednesday underscored that sanctions are a double-edged sword: U.S. exports took the hardest hit, plummeting 34% on the month to the lowest level since January last year. Imports from Russian firms, meanwhile, fell nearly 10%, the third consecutive month of declines in U.S. purchases. That asymmetric fall between buying and selling pushed the trade gap with Russia up 25% to $1.13 billion.

Still, given that U.S. trade with Russia is only a tiny fraction of its total global trade, the pain for the U.S. economy should be minimal for now, barring a major acceleration in tensions that weighs on European growth or pushes up oil prices.

The Russian economy is bearing the brunt.

Although U.S. sanctions directly affecting Russian firms in June cover just a small share of the economy, the fear of additional sanctions often has a much broader impact on the economy. The combined effect of sanctions and falling investment has pushed the country into recession and sparked an investor exodus the International Monetary Fund says could translate into a $100 billion in capital fleeing out of Russia this year.

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